COVID-19 JOB RETENTION SCHEME and JOB RETENTION BONUS
How to protect your workforce in turbulent times
The government have created the Coronavirus Job Retention Scheme to allow employers who might otherwise have no choice but to lay staff off, to retain their workforce on an 80% wage. Staff are effectively held on a retainer, safe in their homes away from the virus. The employer runs payroll as normal – at 80% average wage and pays staff. The grant which includes tax, employers pension and employers NI is paid by the government to the employer. The employer pays PAYE, NIC and pension obligations as normal.
If you are in financial distress due to COVID-19 you can call the new HMRC COVID-19 helpline – Tel: 0800 024 1222
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Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by Coronavirus (COVID-19).
- Grants of up to £2,500 per employee where those employees are unable to work (are ‘furloughed’) because of coronavirus, covering 80% of gross salary costs PLUS Employers National Insurance and Pension contributions.
- Employers can top up wages to 100% but do not have to
- Intended to run for three months in the first instance with the first payments expected in early April and the scheme fully up and running by the end of that month
- The grants will be paid via HMRC
- All UK employers will be eligible
- What next? The claim portal is expected to be available on Monday 20th April.
What staff can and cannot do on furlough
- When on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation. This includes providing services or generating revenue.
- Furloughed staff can work for other companies while they are furloughed so long as their employment contract allows it. So if staff want to top up their 80% salary with a part-time job at their local supermarket, they could do that without compromising their agreement with you.
- Furloughed staff can do volunteer work or training so long as it does not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation.
Updates from 27 March 2020
Full guidance has now been published setting out how businesses can claim through the coronavirus job retention scheme. Some key details are as follows:
- Only employers that created and started a PAYE payroll scheme on or before 28 February 2020 are eligible.
- The scheme covers full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
- Employees made redundant after 28 February 2020 but rehired by their employer can be furloughed.
- Employees hired after 28 February cannot be furloughed.
Furloughing Q&A 02 April 2020
Harry and Lisa discuss the top questions asked by our clients relating to furloughing staff.
- Can staff work when furloughed?
- Can Zero hours staff or variable hours staff be furloughed?
- Can staff on SMP be furloughed?
- Who has to fund furloughed wages?
- How long can staff be furloughed for?
- What happens to staff on minimum wage?
Updates from 04 April 2020
- The grant will be calculated based on regular, contractual pay, such as wages, compulsory commission and past overtime.
- The calculation will not include discretionary commission (including tips) payments or bonuses, non-cash payments or benefits in kind.
Updates from 15 April 2020
Scheme updated to include PAYE payroll schemes that were started on or before 19 March 2020
Updates from 16 April 2020
Scheme extended to 30th June 2020 so claim period now covers 4 months from 1st March 2020 to 30th June 2020.
Updates from 12 May 2020
Scheme extended to 31st October 2020 so claim period now covers 7 month period, however the amount of support provided by the government is being reduced.
- up to 80% of the salaries of employees, subject to a cap of £2,500 per month for the period March to August 2020
- up to 70% of salaries subject to a cap of £2,187.50 for September 2020.
- up to 60% of salaries subject to a cap of £1,875 for October 2020
Flexible furlough scheme announced to come into effect from 1st August 2020.
Updates from 29 May 2020
Flexible furlough scheme brought forward a month.
From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
Updates from 05 November 2020
On 5 November 2020, the Chancellor announced that the CJRS will remain open until March 2021.
For claim periods running to 31 January 2021, the UK Government will pay 80% of employees’ usual wages for hours not worked, up to a cap of £2,500 per month. Employers are expected to pay employer National Insurance and pension contributions for the hours the employee does not work.
Staff can be furloughed on a flexible furlough or full-time furloughing basis.
Employees must have been on an employer’s PAYE payroll by 23:59 on 30 October 2020.
The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
Job Retention Bonus
Updates from 08 July 2020
The Chancellor announced a Job Retention Bonus to assist employers who have kept furloughed employees in employment.
Employers will be able to claim a one-off payment of £1,000 for every employee they have previously received a grant for under the Coronavirus Job Retention Scheme (CJRS), and who remains continuously employed through to the end of January 2021.
To be eligible, the employee must have received earnings in November, December and January, and must have been paid an average of at least £520 per month, and a total of at least £1,560 across the three months.
As the employer, you will be able to claim the bonus after you have filed PAYE information for January 2021, and the bonus will be paid from February 2021.
The bonus is payable to the employer not the employee.
Updates from 09 October 2020
Qualification criteria clarified - to be eligible, employees must earn at least £1,560 between 6 November 2020 and 5 February 2021 and have received earnings in the November, December and January tax months. Employees must also not be serving a contractual or statutory notice period for you on 31 January 2021.
Claims can be made from 15 February until 31 March, once PAYE information for the period up to 5 February 2021 has been submitted.
Updates from 05 November 2020
Job Retention Bonus has been deferred for now. Payments originally planned for February 2021 will no longer be paid as CJRS will be available at that time. An alternative retention incentive will be put in place at the appropriate time.